The Americas – Page 20 – Construction Law

Court Holds Claims Arising from Zoning Violations Subject to Professional Liability Exclusion, Insurer Not Obligated to Defend or Indemnify

May 15 2008

W. World Ins. Co. v. Azoff, Civ. No. 07-00494-BLS2, 2008 WL 4107481 (Mass. Super. Ct. May 15, 2008)

In this case, the Superior Court granted an insurer’s motion for summary judgment and denied the insured contractor’s cross-motion for summary judgment, holding that the insurer was not obligated to defend or indemnify the contractor for a claim brought against it in a separate action, because the claim fell under a professional liability exclusion in the relevant policies.

Appellate Court Finds Liquidated-damages Clause Was Not a Penalty and Thus Was Enforceable

Apr 24 2008

Mineo v. Lakeside Village of Davie, LLC, 983 So. 2d 20 (Fla. Dist. Ct. App. 2008)

Where a contract for the purchase of real property and construction of a residence gave the seller the option of retaining deposits and change order payments as liquidated damages in the event of the buyer’s default, or the seller could sue for specific performance at the purchase price plus interest as delay damages, the liquidated damages provision was not an unenforceable penalty because the contract did not provide the seller with the option to sue for actual damages (which would have change the character of the forfeiture as agreed damages).

Subcontractor’s Contractual Indemnity Obligation to Contractor for EIFS Damage Not Covered by Indemnity Provisions of Texas Product Liability Act

Apr 24 2008

K-2, Inc. v. Fresh Coat, Inc., 253 S.W.3d 386 (Tex. App. 2008)

In this case, the court held that the Texas Product Liability Act did not provide a product seller with the right of indemnity against a product manufacturer for that seller’s independent liability under a contract.

Several homeowners sued their builder, its subcontractor which installed synthetic stucco cladding (EIFS) on their houses and the EIFS manufacturer after experiencing water penetration leading to structural damage. After the claims made by the homeowners and the home builder against the subcontractor were settled, the subcontractor obtained a judgment against the manufacturer for indemnification of the amounts it paid in the settlement. The manufacturer appealed that portion of the judgment finding it liable to indemnify the subcontractor for the amount it paid to settle the home builder’s claims because it was paid under an indemnity clause in the subcontract. It did not dispute that part of the judgment obligating it to indemnify the subcontractor for settlement of the homeowners’ claims. Read More

Insurer’s Duty to Defend Construed Broadly in Favor of Insured

Apr 23 2008

WTC Captive Ins. Co. v. Liberty Mut. Fire Ins. Co., 549 F. Supp. 2d 555 (S.D.N.Y. 2008)

After the World Trade Center disaster in September 2001, the City of New York created a captive insurance company, funded by a grant from the Federal Emergency Management Agency, to insure the costs of lawsuits arising from the WTC clean-up efforts. Liberty Mutual was the primary insurer and had agreed to defend and indemnify the city against claims including, but not limited to, bodily and personal injury. A group of secondary insurers agreed to provide the same coverage if the Liberty Mutual policy became exhausted. All of the policies were retroactive to September 11, 2001. Read More

Constructive Notice Not Established by Discussion in Meetings

Apr 22 2008

Geonie v. O.D. & P. N.Y., Ltd., 855 N.Y.S.2d 495 (N.Y. App. Div. 2008)

An injured worker, Geonie, filed a negligence suit against multiple defendants, including the general contractor, after stepping into an opening left by the removal of a tile from a raised floor in a computer room. Geonie argued that defendants failed to provide adequate safety devices to protect against an elevation-related hazard and failed to adequately supervise the work area. He further claimed that because the removed tile was discussed at weekly safety meetings, the defendants had, at least, constructive notice of the problem. The trial court dismissed Geonie’s claims under New York Labor Law and his negligence claim against the general contractor. Read More

Landscaper Must Have Proper License to Recover Damages for Breach of Contract

Apr 22 2008

Hakimi v. Cantwell Landscaping & Design, Inc., 855 N.Y.S.2d 273 (N.Y. App. Div. 2008)

Hakimi filed a breach of contract claim against Cantwell stemming from landscaping work performed on the property where Hakimi was having a new home built. Cantwell admitted that it was not licensed as a home improvement contractor at the time it did the work. In response to the lawsuit suit, Cantwell filed a mechanic’s lien and a notice of pendency against Hakimi’s property. Cantwell claimed that it did not need a home improvement contractor’s license because Hakimi was building a new house and the administrative code exempted new home construction from the home improvement licensing requirements. Hakimi moved to dismiss Cantwell’s counterclaims and the Supreme Court denied the motion. Read More

Whether Liquidated Damages Clause is Properly Invoked Depends on Whether Actual Damages Can be Determined

Apr 15 2008

Zeer v. Azulay, 2008 WL 1134239 (N.Y. App. Div. Apr. 8, 2008)

In this case, defendant contractors agreed to construct a home on property owned by plaintiffs pursuant to a written contract executed by the parties in September 2003. The parties agreed that if the contractor did not complete the project by February 29, 2004 and obtain a certificate of occupancy, it would be liable for liquidated damages of $250 per day until the work was completed. Read More

No Summary Judgment Where Counterclaim is Equal To or Greater Than Amount Demanded in Complaint

Apr 04 2008

Pronti v. Grigoriou, 853 N.Y.S.2d 718 (N.Y. App. Div. 2008)

In this case, a construction company filed a mechanic’s lien foreclosure action against a homeowner. The parties had executed a written contract providing that Pronti would find an independent contractor to install vinyl siding on Grigoriou’s residence. After Grigoriou paid the full contract price of $11,000, she refused to pay a $500 cleanup fee provided for in the contract. Grigoriou alleged that Pronti performed the work in an “unworkmanlike manner” and counterclaimed for $10,520 in damages. Read More

Economic Loss Doctrine may not Preclude Claims Against Building Contractors for Negligent Construction that Results in Foreseeable Damage to Property

Mar 30 2008

Harris v. Suniga, 344 Or. 301, 180 P.3d 12 (Or. 2008)

In this case, the defendant general contractors constructed an apartment building for a California investment company. The California investment company sold the completed apartment building to the plaintiffs, trustees for the Harris Family Trust. Following the sale, plaintiffs found the apartment building had problems with leaking water and dry rot and filed a claim for negligent construction against the defendant contractors. Prior to suit, the plaintiff and defendants were “strangers.” The plaintiffs did not purchase the apartment building from the defendants, did not contract with the defendants, and did not have any previous contact with the defendants. Plaintiffs alleged that defendants’ failure to install required flashings in the building caused the dry rot damage, and that the failure constituted negligence.

Suit Can Proceed Against General Contractor Based on Claims of Subcontractor’s Negligence and Public Nuisance

Mar 27 2008

New York v. Shaw Contract Flooring Servs., 853 N.Y.S.2d 694 (N.Y. App. Div. 2008)

State university brought claims against a general contractor and subcontractor for asbestos released as a result of tile work performed by the subcontractor. The trial court denied the general contractor’s motion to dismiss the negligence and public nuisance claims. The Appellate Division affirmed. Read More

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